Oncocyte Reports Third Quarter 2021 Financial Results and Provides Corporate Update
Clinical launch of DetermaIO as first and only immunotherapy response prediction clinical test that comprehensively assesses the tumor microenvironment and consistently outperforms PD-L1 IHC and other biomarkers
DetermaIO data in Triple Negative Breast Cancer published in a peer reviewed journal and confirmed in a randomized clinical trial study presented at ESMO; Evidence in fourth tumor type suggests pan-cancer utility
DetermaRx test volume grows
US transplant IP issued supporting the planned launch of TheraSure Transplant Monitor LDT testing in the U.S. and Europe
Conference Call to be held today at 4:30pm ET/ 1:30 pm PDT
IRVINE, Calif., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Oncocyte Corporation (Nasdaq: OCX), a precision diagnostics and monitoring company with the mission to improve patient outcomes by providing clear insights that inform critical decisions in the diagnosis, treatment, and monitoring of cancer, reports financial results for the third quarter 2021 ended September 30, 2021, along with a corporate update.
“The recently announced clinical launch of our DetermaIO™ test, via an early access program (EAP), is an important milestone to inform immunotherapy decisions which strengthens Oncocyte’s differentiated position in precision diagnostics,” said Ron Andrews, Chief Executive Officer and President of Oncocyte. “We believe that the combination of DetermaIO with our comprehensive genomic profiling test DetermaTx™, expected to be launched late in the first quarter of 2022 upon completion of the DetermaIO EAP program, will offer the most complete precision diagnostic solution to inform cancer treatment decisions for the 1.8 million patients diagnosed with cancer in the United States each year and allows us to enter a total available market of
Mr. Andrews continued, “We’ve continued our progress with DetermaRx™ and, despite significant disruptions in early-stage lung cancer surgeries over the summer due to the surge of the COVID-19 Delta variant, we generated
“With the issuance of our IP in blood-based monitoring for transplant rejection, we now have a clear path to launching our own LDT test into the large transplant rejection market in the U.S. and Europe. Oncocyte expects to complete 2021 with solid momentum toward our goal of building a compelling and powerful portfolio of molecular diagnostic tests. As a complement to this progress, our recent appointment of Gisela Paulsen as Chief Operating Officer brings additional world-class talent to the experienced leadership team at Oncocyte and comes on board at an important time as we expand our operations to support the anticipated growth ahead.”
Third Quarter and Recent Highlights Include:
- Announced the clinical launch of the DetermaIO immunotherapy response prediction test via an early access program.
- Oral presentation at the European Society for Medical Oncology (ESMO) on randomized clinical trial data definitively established DetermaIO as a predictive biomarker of immunotherapy response. In the triple negative breast cancer (TNBC) NeoTRIPaPDL1 study, DetermaIO outperformed 80 other immune signatures.
- Published a peer-reviewed study in the journal Cancers with investigators from leading academic institutions MD Anderson and Yale demonstrating the predictive potential for DetermaIO. Study data showed that DetermaIO demonstrates superior accuracy compared to standard of care PD-L1 immunohistochemistry (IHC) for prediction of a patient’s response to immunotherapy in TNBC. Previous data has been presented in lung, bladder, renal and kidney cancers suggesting a broad pan-cancer utility of the test.
- Strengthened transplant IP portfolio with issuance of a U.S. patent covering digital PCR technology for early detection of organ transplant rejection, building upon prior issued U.S. and EU patent for quantification of donor derived cfDNA, supporting the launch of TheraSure Transplant Monitor as an LDT in the U.S.
- Launched and completed site enrollment of the first Real-World Evidence (RWE) registry intended to evaluate biomarker adoption and precision medicine in creating personalized treatment options for early-stage lung cancer patients, with enrollment targeting more than 1,000 patients at 25 sites across the U.S. beginning in Q4 2021.
Corporate
- Appointed industry veteran Gisela A. Paulsen as Chief Operating Officer in October 2021.
Third Quarter 2021 Financial Results
On September 30, 2021, Oncocyte had cash, cash equivalents and marketable securities of
Oncocyte currently derives its revenues from the sale of its lung cancer test, DetermaRx, which was commercially launched in early 2020 and pharma services generated by its wholly owned subsidiary, Insight Genetics, which was acquired on January 31, 2020. During the first quarter of 2021, after accumulating additional history of cash receipts and other factors considered by management for Medicare Advantage-covered DetermaRx tests, including the recently published Medicare rate, the Company transitioned to the accrual basis for tests covered by Medicare Advantage insurance plans. Oncocyte will continue to recognize revenues for commercial and other payors on a cash basis until we have reimbursement contracts with those payors. At that point, those contracts will also progress to the accrual basis for DetermaRx tests. Until that time, for all payors other than Medicare and Medicare Advantage, Oncocyte expects to recognize revenue for DetermaRx tests performed on a cash basis.
Revenues for the three months ended September 30, 2021, were approximately
Cost of revenues for the third quarter 2021 were approximately
Research and development expenses for the third quarter of 2021 were
General and administrative expenses for the third quarter of 2021 were
Sales and marketing expenses for the three months ended September 30, 2021 were
Oncocyte has provided a reconciliation between GAAP and non-GAAP operating losses in the financial tables, included with this earnings release, which it believes is helpful in understanding its ongoing operations.
For the third quarter ended September 30, 2021, Oncocyte reported a net loss of
Cash used in operations was approximately
Conference Call Information
The Company will host a conference call today, November 9th at 4:30 pm EDT / 1:30 pm PDT to discuss the results along with recent corporate developments. The dial-in number in the U.S./Canada is 877-407-9716; for international participants, the number is 201-493-6779. For all callers, please refer to Conference ID: 13722620. To access the live webcast, go to the investor relations section on the Company’s website, or by clicking here http://public.viavid.com/index.php?id=146378. The webcast replay will be available on the Oncocyte website for 90 days following the completion of the call.
About Oncocyte
Oncocyte is a precision diagnostics and monitoring company with the mission to improve patient outcomes by providing clear insights that inform critical decisions in the diagnosis, treatment, and monitoring of cancer. The Company, through its proprietary tests and pharmaceutical services business, aims to help save lives by accelerating the diagnosis of cancer and advancing cancer care. The Company’s tests are designed to help provide clarity and confidence to physicians and their patients at every stage. DetermaRx™ identifies early-stage lung cancer patients who are at high risk for cancer recurrence and who may benefit from adjuvant chemotherapy. DetermaIO™, a gene expression test currently used as a research-use only tool, assesses the tumor microenvironment to predict response to immunotherapies. The Company’s pipeline of tests in development also includes DetermaTx™, which will assess mutational status of a tumor, blood-based monitoring test DetermaCNITM, and long-term recurrence monitoring test DetermaMx™. In addition, Oncocyte’s pharmaceutical services provide companies that are developing new cancer treatments a full suite of molecular testing services to support the drug development process.
DetermaRx™, DetermaIO™, DetermaTx™, DetermaCNI™, DetermaMx™ and TheraSure™ are trademarks of Oncocyte Corporation.
Oncocyte Forward Looking Statements
Oncocyte cautions you that this press release contains forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “may,” and similar expressions) are forward-looking statements. These statements include those pertaining to, among other things, the expected launch of DetermaTX late in the first quarter Q1 of 2022; the expectation that the combination of DetermaIO and DetermaTX will offer the most complete precision diagnostic solution to inform cancer treatment decisions for the 1.8 million patients diagnosed with cancer in the United States, allow Oncocyte to enter a total available market of
Investor Contact
Bob Yedid
LifeSci Advisors, LLC
646-597-6989
bob@lifesciadvisors.com
Media Contact
Terri Clevenger
Westwicke/ICR
203-856-4326
Terri.clevenger@icrinc.com
| ONCOCYTE CORPORATION | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 43,340 | $ | 7,143 | ||||
| Accounts receivable | 1,032 | 203 | ||||||
| Marketable equity securities | 923 | 675 | ||||||
| Prepaid expenses and other current assets | 2,296 | 1,205 | ||||||
| Total current assets | 47,591 | 9,226 | ||||||
| NONCURRENT ASSETS | ||||||||
| Right-of-use and financing lease assets, net | 2,918 | 3,262 | ||||||
| Machinery and equipment, net, and construction in progress | 4,719 | 3,262 | ||||||
| Equity method investment in Razor | - | 13,417 | ||||||
| Goodwill | 18,432 | 9,187 | ||||||
| Intangible assets, net | 92,722 | 15,009 | ||||||
| Restricted cash | 1,700 | 1,700 | ||||||
| Other noncurrent assets | 259 | 356 | ||||||
| TOTAL ASSETS | $ | 168,341 | $ | 55,419 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 1,198 | $ | 432 | ||||
| Accrued compensation | 3,336 | 3,468 | ||||||
| Accrued expenses and other current liabilities | 1,869 | 2,284 | ||||||
| Accrued severance from acquisition, current | 2,452 | - | ||||||
| Accrued liabilities from acquisition, current | 2,236 | - | ||||||
| Loans payable, current | 1,500 | 2,390 | ||||||
| Right-of-use and financing lease liabilities, current | 786 | 422 | ||||||
| Total current liabilities | 13,377 | 8,996 | ||||||
| NONCURRENT LIABILITIES | ||||||||
| Loans payable, net of deferred financing costs, noncurrent | 178 | 1,508 | ||||||
| Right-of-use and financing lease liabilities, noncurrent | 3,762 | 4,312 | ||||||
| Contingent consideration liabilities, noncurrent | 51,675 | 7,120 | ||||||
| TOTAL LIABILITIES | 68,992 | 21,936 | ||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding | - | - | ||||||
| Common stock, no par value, 230,000 shares authorized; 92,158 and 69,117 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 251,238 | 157,160 | ||||||
| Accumulated deficit | (151,889 | ) | (123,677 | ) | ||||
| Total shareholders’ equity | 99,349 | 33,483 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 168,341 | $ | 55,419 | ||||
| ONCOCYTE CORPORATION | |||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| Net revenue | $ | 984 | $ | 555 | $ | 4,138 | $ | 713 | |||||||||
| Cost of revenues | 860 | 601 | 2,948 | 1,139 | |||||||||||||
| Cost of revenues – amortization of acquired intangibles | 990 | - | 2,371 | - | |||||||||||||
| Gross profit | (866 | ) | (46 | ) | (1,181 | ) | (426 | ) | |||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 3,142 | 2,615 | 9,040 | 8,000 | |||||||||||||
| Sales and marketing | 2,931 | 1,568 | 7,858 | 4,620 | |||||||||||||
| General and administrative | 5,495 | 4,995 | 18,193 | 13,378 | |||||||||||||
| Change in fair value of contingent consideration | 1,170 | (2,980 | ) | 2,260 | (2,980 | ) | |||||||||||
| Total operating expenses | 12,738 | 6,198 | 37,351 | 23,018 | |||||||||||||
| Loss from operations | (13,604 | ) | (6,244 | ) | (38,532 | ) | (23,444 | ) | |||||||||
| OTHER INCOME (EXPENSES), NET | |||||||||||||||||
| Interest expense, net | (50 | ) | (78 | ) | (167 | ) | (175 | ) | |||||||||
| Unrealized gain (loss) on marketable equity securities | (138 | ) | 20 | 248 | (18 | ) | |||||||||||
| Pro rata loss from equity method investment in Razor | - | (482 | ) | (270 | ) | (1,112 | ) | ||||||||||
| Gain on extinguishment of debt (PPP loan) | - | - | 1,141 | - | |||||||||||||
| Other income, net | (8 | ) | 1 | 10 | 31 | ||||||||||||
| Total other income (expenses), net | (196 | ) | (539 | ) | 962 | (1,274 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | (13,800 | ) | (6,783 | ) | (37,570 | ) | (24,718 | ) | |||||||||
| Income tax benefit | - | - | 9,358 | 1,095 | |||||||||||||
| NET LOSS | $ | (13,800 | ) | $ | (6,783 | ) | $ | (28,212 | ) | $ | (23,623 | ) | |||||
| Net loss per share: basic and diluted | $ | (0.15 | ) | $ | (0.10 | ) | $ | (0.32 | ) | $ | (0.36 | ) | |||||
| Weighted average shares outstanding: basic and diluted | 91,453 | 67,247 | 87,812 | 64,843 | |||||||||||||
| ONCOCYTE CORPORATION | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (28,212 | ) | $ | (23,623 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 582 | 529 | ||||||
| Amortization of intangible assets | 2,371 | 59 | ||||||
| Amortization of right-of-use assets and liabilities | 169 | 959 | ||||||
| Impairment charge for long-lived assets | - | 88 | ||||||
| Pro rata loss from equity method investment in Razor | 270 | 1,112 | ||||||
| Stock-based compensation | 5,136 | 4,081 | ||||||
| Unrealized (gain) loss on marketable equity securities | (248 | ) | 18 | |||||
| Amortization of debt issuance costs | 46 | 80 | ||||||
| Change in fair value of contingent consideration | 2,260 | (2,980 | ) | |||||
| Deferred income tax benefit | (9,358 | ) | (1,095 | ) | ||||
| Gain on extinguishment of debt (PPP loan) | (1,141 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | $ | (824 | ) | $ | (372 | ) | ||
| Amount due to Lineage and affiliates | - | (6 | ) | |||||
| Prepaid expenses and other assets | (787 | ) | (529 | ) | ||||
| Accounts payable and accrued liabilities | (1,592 | ) | 1,843 | |||||
| Accrued severance from Chronix Biomedical acquisition | 2,452 | - | ||||||
| Net cash used in operating activities | (28,876 | ) | (19,836 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of Insight Genetics, net of cash acquired | (607 | ) | (6,189 | ) | ||||
| Acquisition of Razor Genomics asset, net of cash acquired | (6,648 | ) | - | |||||
| Acquisition of Chronix Biomedical, net of cash acquired | (4,459 | ) | - | |||||
| Equity method investment in Razor | - | (4,000 | ) | |||||
| Construction in progress and purchases of furniture and equipment | (1,846 | ) | (1,061 | ) | ||||
| Net cash used in investing activities | (13,560 | ) | (11,250 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from exercise of stock options | 2,573 | 72 | ||||||
| Proceeds from sale of common shares | 65,262 | 18,343 | ||||||
| Financing costs to issue common shares | (2,676 | ) | (58 | ) | ||||
| Proceeds from sale of common shares under at-the-market transactions | 12,724 | - | ||||||
| Financing costs for at-the-market sales | (390 | ) | - | |||||
| Proceeds from exercise of warrants | 2,631 | - | ||||||
| Common shares received and retired for employee taxes paid | (239 | ) | (14 | ) | ||||
| Repayment of loan payable | (1,125 | ) | (125 | ) | ||||
| Repayment of financing lease obligations | (127 | ) | (53 | ) | ||||
| Proceeds from PPP loan | - | 1,141 | ||||||
| Net cash provided by financing activities | 78,633 | 19,306 | ||||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 36,197 | (11,780 | ) | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING | 8,843 | 23,772 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING | $ | 45,040 | $ | 11,992 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | 96 | $ | 131 | ||||
| SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES | ||||||||
| Common stock issued for acquisition of Razor Genomics asset | $ | 5,756 | $ | - | ||||
| Deferred tax liability generated from the acquisition of Razor Genomics asset | 7,564 | - | ||||||
| Common stock issued for acquisition of Insight Genetics | - | 5,000 | ||||||
| Common stock issued for acquisition of Chronix Biomedical | 3,299 | - | ||||||
| Deferred tax liability generated from the acquisition of Chronix | 1,794 | - | ||||||
| Initial fair value of contingent consideration at acquisition date | 42,295 | 11,130 | ||||||
| Assumed liability from Chronix Acquisition | 3,489 | |||||||
| Holdback liability | - | 600 | ||||||
| Construction in progress, machinery and equipment purchases included in accounts payable, accruedliabilities and landlord liability | 193 | 1,109 | ||||||
| Non-GAAP Financial Measures | |
| This earnings release includes loss from operations prepared in accordance with accounting principles generally accepted in the United States (GAAP) and includes certain historical non-GAAP adjustments to operating expenses. In particular, Oncocyte has provided non-GAAP total loss from operations, adjusted to exclude noncash stock-based compensation, change in fair value of contingent consideration and depreciation and amortization expenses. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP. However, Oncocyte believes the presentation of non-GAAP total loss from operations, when viewed in conjunction with our GAAP total loss from operations, is helpful in understanding Oncocyte’s ongoing operations and its programs. | |
| Furthermore, management uses these non-GAAP financial measures in the aggregate to establish budgets and operational goals, to manage Oncocyte’s business and to evaluate its performance and its programs. | |
| Oncocyte Corporation | ||||||||||||||
| Reconciliation of Non-GAAP Financial Measure | ||||||||||||||
| Adjusted Loss from Operations | ||||||||||||||
| (Amounts in Thousands) | ||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
| GAAP loss from operations - as reported | $ | (13,604 | ) | $ | (6,244 | ) | $ | (38,532 | ) | $ | (23,444 | ) | ||
| Stock-based compensation expense | 1,849 | 1,784 | 5,136 | 4,081 | ||||||||||
| Impairment charge for long-lived assets | - | - | - | 422 | ||||||||||
| Change in fair value of contingent consideration | 1,170 | (2,980 | ) | 2,260 | (2,980 | ) | ||||||||
| Severance charge | - | 1,260 | - | 1,260 | ||||||||||
| Depreciation and amortization expense | 1,246 | 91 | 2,954 | 321 | ||||||||||
| Non-GAAP loss from operations, as adjusted | $ | (9,339 | ) | $ | (6,089 | ) | $ | (28,182 | ) | $ | (20,340 | ) | ||
